Privatization, Truth-Telling and Easy Answers

As I previously noted, I’ve been bemused by the level of interest in prison privatization displayed by my students this semester. The subject of contracting out in general, however, is a staple of my Law and Policy course.

Use of the term “privatization” is a misnomer; the impression is that a service or task is no longer being provided by government. That is rarely if ever the case, at least in the U.S. The term typically refers to a decision by a government agency to contract with a nongovernmental business or organization to provide a government benefit. Government continues to use tax dollars to pay for that service or benefit, and remains responsible for its proper delivery.

Sometimes, contracting out makes a lot of sense. Sometimes it doesn’t. So our class discussions are not “should we or shouldn’t we;” instead, we consider when and how. 

Unfortunately, in far too many venues, what should be a thoughtful consideration of relevant factors has become yet another ideological litmus test, with predictable consequences. An example:

When he was governor of Florida, Jeb Bush privatized veterans’ health benefits. It didn’t go well. As CNN reported

Bush’s experience outsourcing veterans’ nursing homes in Florida was a case study in privatization’s pitfalls. By the time it was over, Florida officials determined the state could provide higher-quality care at a better price for taxpayers.

Despite what should have been a sobering experience (click through for the details), Bush’s campaign continues to insist on the virtues of privatization, and claim it is “the remedy” for the problems experienced by the Veterans Administration.

I’ve picked on Bush, but there are hundreds of other examples, because we voters reward politicians who have bumper-sticker remedies for what ails us–politicians selling simple answers to complicated problems. (Are teenagers dropping out or getting pregnant? Put prayer back in schools! Is the economy underperforming? Cut taxes!) (Actually, “cut taxes” seems to be the one-size-fits-all solution for far too many politicians. Measles epidemic? Potholes? Crime wave? Whatever the problem, the reflexive answer is “Cut taxes!”)

The problem is, simple answers sell. We voters are far too ready to buy snake-oil, and far too reluctant to accept the reality that sometimes–not always, but often–the real answers begin with a recognition that “it’s complicated” and “it depends.”


  1. I would be shocked to actually hear a candidate utter the words ” I don’t know”, “It’s complicated so an easy answer is not possible”, or “It depends”. They are big on sticking to the party’s talking points, and as a result usually have very little to say. I suppose if voters started acting like adults and demanding more, the candidates might be more willing to take the risky position of defining a problem in practical terms and looking for a workable solution that goes beyond the party’s talking points.

  2. The prision system is becoming more of a joke. 150% increase in inmates since either 2000 or 2005. That’s ridiculous crime hasn’t increased at the same rate. We are allowing these institutions to control who we are putting behind bars. And to the general public they think its great. “Putting criminals behind bars”. We are set on this mind set of retribution will deter crime! No, not always. We shouldn’t be preparing people for a life in prision. That doesn’t make sense. We should want productive citizens in society. But yet our recividism rate are outrageous. And for some individuals we are putting right back into the same situations and expecting different results. Well no dummy its not going to work so easily!

    As to the part about our politicians. It’s almost a catch-22. We want them to give us the solutions, but we don’t want to hear the real solutions to problems. Public policy issues are rarely fixed with one end all and be all solution. I would be freighted if they all were fixed that way. Nonetheless if a candidate were to ever get up there and say I don’t know, its complicated so there isn’t an easy answer. We would label that person incompetent and skewer for the rest of the time. So the solution here does start with us demanding more from our elected officials. The 7% of us voting isn’t enough to demand change. We have to become more civicly engaged. And we have to want that change.

  3. I’m usually anti-privatization when the conservatives call the shots. Example is Cheney throwing all sorts of business to his old company, Halliburton & its sub, KBR. Cheney still held a large stock position in HAL, plus deferred compensation & stock options. And he did this without letting competitors in. So we ended up with Blackwater, owned by a rich Republican who donated heavily to the White House. Eventually the security for protecting the Embassies was turned over to Blackwater and the US Marines were fired (after 100’s of years with that job which they handled very well). In time the Blackwater top dog in Iraq was being paid something like four times what US General Petraeus was being paid although Petraeus was commander of over a hundred thousand soldiers and B’water a small fraction of that. In time B’water killed a bunch of Iraqi civilians but some of the killers are FINALLY in US prisons. KBR was being sued time and again so HAL just “spun it off” to the HAL stockholders. And Cheney’s stock doubled and tripled in value thanks to his decision to invade Iraq. Ah so…

  4. These are all good examples of the problems I think we can end up with if there is a private or semi-private justice center in Indy. Trouble ahead.

  5. It is going to take more than electing Joe Hogsett Mayor of Indianapolis in November to bring the forward motion, at whatever speed, regarding the Criminal Justice Center to a halt. We need full disclosure, careful and intelligent planning and decision-making before contracting with anyone and signing on the dotted lines to begin this project. It is much needed due to the current out-dated system but, what we have been told thus far regarding contracting for this Center, makes the current out-dated system look better all the time.

  6. In a Bush vs. Hillary race, the rich won’t care who wins. They’ll fund both campaigns to preserve access, but they’ll be very pleased however it turns out.

  7. When looking for privatization lessons, don’t forget the Daniels administration’s very expensive 2007 train wreck that outsourced the intake process for the Family and Social Services Administration. The debacle ended up costing taxpayers billions, and caused untold human suffering for low-income Hoosiers who depended on those benefits. Not surprisingly, none of the responsible parties ever had to answer for their decision.

  8. Over the years, I’ve generally made a distinction between government’s core and non-core functions, with the non-core functions being appropriate for private contractors to perform. Running prisons have been a core function of government for centuries. But construction of the prison, supplying and equipping it are non-core functions provided by contractors and/or vendors so that the public employees can focus on their core responsibilities.

    The assumption that private businesses can perform core government functions more efficiently at less cost and still make a profit sounds to good to true and often it is. Private contractors have to make a profit AND they often make far higher salaries to folks at the top with more benefits and perks than public employees at all levels. All of that costs real money and often at the expense of the quantity and quality service and well-trained staff.

    Where I really draw a line between private and public provision of services is in discriminatory cherry picking of service delivery. I was distressed when UPS and Fed Ex were permitted to cream the most lucrative portion of U.S. mail (packages) from the postal service which needed that service to help subsidize the most expensive daily delivery of individual letters, bills, etc. to every rural, small town, and urban home and business in America. As a result, private contracting forced the cost of postage stamps (the per unit cost) higher and faster than at any other time in the nation’s history. (Congress has piled on to require the post office to fund future obligations in the present, but escalating postal rates were evident prior to this development).

    Where will it end? Discontinuation of Saturday service is a distinct possibility. Post offices in smaller communities are closing. Service was the whole reason to create and sustain the postal service, but privatization is forcing consideration of both service curtailment AND higher costs. Have we learned our lesson yet?

  9. Oddly enough the idea that the market can provide a better service via privatization is some what self defeating. I worked for large transnational companies most of my life. If we needed computers, printers, faxes, paper we purchased these items through different vendors. There would be a contract with the vendors. Every few years we would change vendors.

    Privatization can end up simply being a method to reward campaign contributors. There have also been instances where a Government Employee/Appointee has nested comfortably in the Private Company once the service has been transferred to the Private Sector. My statement above on privatization being self defeating is when the private company receives a no bid contract decades long in duration. Instead of a contract the people can review, the contract can be hidden behind so called trade secrets.

  10. The Great Oligarchy Plot trains minions to believe that capitalism is inherently superior to socialism because Communism relies on socialism. Nonsensical I know but easy to preach.

    The truth is that who owns the means doesn’t much matter. Competition in markets that can sustain it makes the difference.

    Where competition is not sustainable, like in prisons for instance, privately owned means are always ultimately the most expensive choice. Capitalism’s one rule, make more money regardless of the cost to others kicks in. Always and inevitably.

    The party of business you would think knows all of this because it’s basic business. The party of oligarchy is a different story. They do, as my dog does, what earns treats. In her case a morsel, in their case votes. Votes purchased by brainwashing via entertainment media and/or campaign advertising.

    So simple and obvious except to the victims of it. But then Madof’s victims were also happy until they weren’t.

    Once sold seed corn is expensive to buy back. Add that bill left to our kids to the bill for climate change adaptation and recovery left to them so fossil fuel business can profit to the last molecule and the future left in the wake of conservative extremist entertainers is blindingly apparent and truly staggering.

  11. I agree with everything you said, but it isn’t just going for the simple catch-phrase solutions, especially in Indiana. First priority: make sure you get re-elected, so you gerrymander districts and pander to your base–hence RFRA as an example. Second priority: divert tax money to your political supporters, since paying taxes is mandatory, and coming up with innovative new products and services to make money the old-fashioned way is such hard work and competitive. Think of every possible way to divert tax money to privateers, and in the case of vouchers, you get a two-fer: most of this money goes to religious-based schools, so you pander to your base, too. Ignore the statistics that show no improvement in student learning. Also, ignore democracy in the case of Glenda Ritz, selected by a larger majority of Hoosiers than voted for Pence, to administer education. Do everything possible to marginalize her and diminish her power because this might diminish the returns for the investors.

    Accept large political contributions from the “investors” who established private prison corporations, and then push for longer sentences, and in the case of non-violent offenders, it saves money for the investors because it takes fewer guards. Never mind the lives which were ruined in the process. The more money your supporters make, the more they can contribute to your next campaign. Also, the SCOTUS helped out here, too, with the Citizens United case.

    Then there’s ethics. So what if a government official, whose job it was to regulate an industry, leaves government employment to go to work for one of the companies he was regulating, right after the company reaped a major windfall at the expense of the public? No problem there.

  12. Gopper says no difference between Bush and Clinton and I agree that both families have turned their public service into family fortunes.

    I don’t see however much indication that Hillary won’t continue what Obama has done to recover from Bush II. Recover successfully.

    Bush III is being pretty evasive about how much he will follow Cheney’s lead compared to his brother’s blind allegiance.

    A relatively known vs a relatively unknown.

    I personally believe however that the next 8 years will see the collapse of capitalism from self inflicted wounds as well as Mother Nature having her way with us from climate change. Add to that the holy wars launched by Bush I & II and the next administration will not be successful no matter what they do. The load from the past is just too great. We didn’t adapt when we could have.

    So which candidate will best start to raise a new country from the ashes of the old?

    I believe that Hillary is more of a thinker and will adapt quicker to the new reality as Obama has.

  13. Bernie Sanders’ News

    I might have to register as a Democrat to vote for Bernie.

    I don’t think Liberals understand what their correct position is supposed to be on gun control. A real Liberal would oppose gun control. A crypto-communist, however, would love gun control.

    I wonder if today’s Liberals are being honest with their ideological identification.

  14. Pete,

    Hillary is a rich Republican from Park Ridge. She changed labels and baseball allegiances as opportunity dictated, but Hillary has made every move in her life based on money.

    I don’t think she holds a single core political belief except misandry.

  15. Here’s something that will boggle your mind Gopper. I think that the majority of those who post here are merely independent thinkers who favor what’s effective for progress into the future and disfavor dysfunction. Hard to label.

    Some times this, sometimes that, always trying to build the best future using what’s demonstrably proven safe and effective.

    It’s not rocket science.

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